Hotel Profitability Improvement To Do List
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This Hotel Profitability Improvement Plan is about understanding what is going on in your marketplace. In order to grow revenue, we need to first know what opportunities exist. These steps are designed to help you create a process where you will track the right information about your business, gather information about your competitors and demand generators. You can take this and turn that data into actions to help put you make plans for improving in any economy.
The key to Hotel Profitability Improvement is often in their approach to managing this issue. All hotels look at the STAR Report, but highly profitable hotels use it as more than a report card. True Competitive Positioning involves taking the market data you have gathered and determining how you stack up compared to your competitors in each segment. This is the foundation for deciding how much you can grow, what pieces of business to go after, what changes you need to make in your product, and how you will sell against each competitor.
Staffing and amenities
One of the ways to create sustainable growth in revenue is to use your market and competitive position data. With this data you can determine what additional services and amenities you may want to add in order to acquire new business from your competition, or is becoming needed in order slow losses of existing business.
Up to this point we have dealt with figuring out what travelers to our area want in a hotel, what they are willing to pay, what we offer compared to the competition, and how we should compete. Guest Experience is, of course, the measure of how good a job we do of delivering our product. All hotels, no matter how good, receive negative comments. Hotels with high guest satisfaction understand how to manage expectations, deliver great service and most importantly deal with negative comments.
Determining what rates to sell each note is definitely a component of Rate Placement and Hotel Profitability Improvement, but it extends beyond that. Highly profitable hotels have detailed plans to manage all of their rates. They vary rates by booking channel and market segment, based on their overall goals. They set rates according to what they are trying to accomplish, not how many rooms they are trying to sell. Sales and marketing programs determine their rooms volume strategy, and the rates they list are reflective of their overall revenue strategy. Regardless of whether they are upscale or midscale, they use negotiated volume sources to fill a base number of rooms, and the use of mass distribution sources (OTS’s) to sell their remaining rooms. Rate is not their only means of driving demand.
All hotels sell rooms. High-profit hotels plan out their room sales, not just take a wait and see what happens attitude. These hotels track when their busy and slow times occur. Furthermore, they track it by day of the week, time of year, and market segment. If their base rooms come from business travelers, then they turn off, or heavily restrict, discount business at times of the year when corporate travelers are plentiful, and open those channels backup when they know corporate travelers will not be coming. This allows them to maximize rates when demand for highly rated business is peaking, and minimize revenue loss, by taking enough low rated business to cover their minimum cost in low demand.
Service and Expense
Few hotels have significant overstaffing or overspending. It does often occur during peak revenue times when there is enough revenue to cover up for a lack of solid scheduling and cost controls. Highly profitable hotels track and understand the variability of profit at different occupancy points. They open and close discount channels not just as rooms sold go up and down, but also as they find themselves at points where the next several rooms sold do not add expense, allowing for more profit from even s discount rate. Managers of these hotels also understand that good expense management comes not from cutting expenses, but from managing the relationship between revenue and expense.